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Letter to the Editor
Tuesday August 15
Boyd Group Reports Decline in Q2
The Boyd Group Income Fund has reported its financial results for the three and six-month periods ended June 30, 2006. For the second quarter ended June 30, 2006, revenue declined to $45.0 million compared to revenue of $45.7 million in the second quarter of 2005, after adjusting for discontinued operations. The decline in sales resulted from the impact of foreign currency translation of sales generated from U.S. operations, offset by strong same store sales growth in Canada and new revenue generated from start-up locations in the U.S.Sales in Canada in the second quarter of 2006 totalled $16.5 million, an increase of $1.6 million or 10.2 percent, compared to the second quarter a year ago. Sales increases in Canada are entirely due to same store sales growth, with increases reported in all four western provinces.
Sales in the U.S. in the second quarter of 2006 decreased 7.4 percent to $28.5 million compared to $30.8 million in the second quarter of 2005. Translation of U.S. dollar revenues at a weaker U.S. dollar exchange rate, relative to the Canadian dollar, during the second quarter of 2006 accounted for $3.0 million of this decline. This decline was partially offset by new sales of $1.1 million attributable to: two Illinois area start-ups commenced during the second quarter of 2005; three new start-ups commenced in 2006; and, new glass repair and replacement revenues generated in the Arizona, Georgia, Nevada and Washington markets. Excluding the impact of foreign currency translation and collision and glass repair start-ups, U.S. same store sales declined $0.4 million or 1.4 percent compared to the same period in the prior year.
Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the second quarter of 2006 totalled $2.5 million, or 5.5 percent of sales, compared to EBITDA of $2.7 million, or 6.0 percent of sales, in the second quarter of 2005. This decline is primarily a result of lower amortization of prepaid rebates.
Net loss for the second quarter of 2006 after giving effect to the non-controlling interest, and after discontinued operations, was $654,038 or ($0.07) per fully diluted unit compared to net earnings of $140,411 or $0.01 per fully diluted unit in the second quarter of 2005.
The Fund's net loss resulted primarily from the impact of losses in the U.S. for which no tax benefit was recorded.
For the six months ended June 30, 2006 revenue totalled $92.1 million compared to revenue of $92.2 million in the same period a year ago. EBITDA for the six months ended June 30, 2006 totalled $4.4 million, or 4.8 percent of sales, compared to EBITDA of $6.5 million, or 7.1 percent of sales, in the corresponding period a year ago. The Fund's net loss for the six months ended June 30, 2006 was $2.4 million or ($0.26) per fully diluted unit compared to net income of $1.5 million or $0.17 per fully diluted unit in the same period a year ago.
The Fund had total debt outstanding at June 30, 2006 of $38.7 million, comprised of: $2.0 million in bank indebtedness; $7.8 million of senior bank term debt; $14.5 million of U.S. bank debt; $0.4 million of supplier debt; $0.7 million of vendor loans; $1.0 million of obligations under capital lease; and, $12.3 million in subordinate convertible debentures and exchangeable notes. This compares to $40.6 million of total debt outstanding at March 31, 2006, and $39.8 million as at December 31, 2005. Subsequent to June 30, 2006, Boyd Group prepaid US$2.8 million of U.S. bank debt held by the Fund's senior lenders and amended senior credit facilities to increase the Fund's operating line of credit from $12 million to $15 million.
The Boyd Group Inc. is the largest operator of collision repair facilities in Canada and among the largest in North America. The company operates locations in the four western Canadian provinces principally under the trade names Boyd Autobody & Glass and Service Collision Repair, as well as in six U.S. states principally under the trade name Gerber Collision & Glass. The company also operates Gerber National Glass Services, an auto glass repair and replacement referral business with affiliated service providers throughout the United States.
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